Question

What are the nash equilibrium strategies for firm a and b respectively?

Answer 1

The answer is "Low price, low price".

In game theory, the Nash equilibrium which was named after American mathematician John Forbes Nash Jr., is an answering idea of a non-cooperative game including at least two players in which every player is expected to know the equilibrium procedures of alternate players, and no player has anything to pick up by changing just his own strategy. If every player has picked a technique and no player can profit by changing methodologies while alternate players keep theirs unaltered, at that point the present arrangement of methodology decisions and the relating settlements constitutes a Nash equilibrium.